A Doctor Exposes Obama's Health Care Fallacy

Paul Hsieh
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Posted: Jun 20, 2011 10:02 AM

Suppose President Obama proposed reviving the faltering American economy by creating a federal “Department of Technology” to encourage Silicon Valley technology companies to merge into large consortiums. Bureaucrats would then tell these companies what products they should produce and sell. Most Americans would consider that approach ridiculous. They know that innovations such as iPads and smartphones were created by entrepreneurs competing in a free market, not by government central planners. Yet the Obama administration is committing the same error by pushing doctors and hospitals into government-supervised “Accountable Care Organizations.”

Accountable Care Organizations (ACOs) represent the latest attempt to control escalating health costs by government central planning. Through financial carrots and sticks, doctors and hospitals would be “encouraged” to merge into large provider groups to deliver medical care according to government “comparative effectiveness” guidelines. Government would monitor ACO performance with mandatory electronic medical record systems.

ACO proponents argue this would encourage doctors to practice efficient high-quality medicine, while avoiding unnecessary tests and treatments. President Obama has repeatedly cited the Mayo Clinic as a model high-quality medical provider he wishes to replicate nationally with this approach.

However, even the Mayo Clinic said it could not abide by the Obama administration’s proposed ACO regulations. The American Medical Group Association (AMGA), the umbrella organization representing large medical groups including the prestigious Mayo Clinic and Cleveland Clinic, recently issued a statement characterizing the ACO guidelines as “overly prescriptive [and] operationally burdensome.” Given a choice, 93% of AMGA members would decline to participate in the (still voluntary) federal ACO program.

At root, ACO supporters presume that government bureaucrats are better at determining best medical and business practices than the physicians and hospitals whose own reputations and profitability are at stake. Obama health advisor Nancy DeParle wrote last year in the Annals of Internal Medicine, “[P]hysicians will need to embrace rather than resist change. The economic forces put in motion by the [Affordable Care] Act are likely to lead to vertical organization of providers and accelerate physician employment by hospitals and aggregation into larger physician groups.” But as Dr. Jay Parkinson observes, this really means that “bureaucrats determine the business model of a doctor’s practice.”

Premier medical centers such as the Mayo Clinic excel because their doctors and administrators are constantly striving to innovate. To succeed, they require the freedom to adopt successful new methods (and reject unsuccessful ones) based on their particular requirements and goals. They—not the government—must decide whether and when to offer new medical procedures such as PET-CT scans for detecting early cancers or to invest in new electronic medical records systems.

Smaller medical practices require the same freedom to prosper and thrive. The Access Health Care clinic founded by Dr. Brian Forrest of Apex, NC uses an innovative combination of “direct pay” and price transparency to bypass the traditional insurance system. By eliminating insurance middlemen and reducing other administrative overhead, Dr. Forrest can charge patients less than their out-of-pocket Medicare expenses. He is thus able to spend more time with his patients to better manage their complex diabetes, cholesterol, and blood pressure problems. He has been so successful in reducing his patients’ risk of strokes and heart attacks that in 2009 his small clinic was named one of 26 “Cardiovascular Centers of Excellence” in the U.S., alongside prestigious university medical centers.

Other physicians seeking to improve their patient outcomes have sought Dr. Forrest’s advice on how to apply similar methods to their own practices. This is how genuine innovations develop and spread—when providers are free to seek out, evaluate, and implement good ideas according to their best judgment without government interference.

By imposing its own mandatory medical and business practices on American doctors, the government would destroy the very freedom that enabled both Dr. Forrest and the Mayo Clinic to excel. ACOs will become the medical equivalent of the state-run giant collective farms that failed to feed the USSR. Central planning will strangle innovation in American medicine just as it strangled the Eastern Bloc economies during the Cold War.

Americans would never have enjoyed the technology boom of the past 20 years if central planners had told Silicon Valley entrepreneurs how they must run their companies and which products they must sell. We would never tolerate bureaucrats dictating what kinds of MP3 players or tablet computers we may purchase. If we value our lives, we shouldn’t tolerate it in our health care either.


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